- teeta lice COMPARED WITH GORDON PROPOSALS How other lands handle foreign investments ow do recent actions of-the Canadian government toward foreign investment, adopted re- cently in the Gordon budget, com- pare With what is being done in regard to this problem in other countries? It will be recalled that the Gordon proposals called for a withholding tax on dividends paid to foreign investors, The tax is 10 percent for companies with 25 percent Canadian ownership, or for companies percent of their shares listed on the Canadian stock exchange; and 20 percent for companies not meeting this test. Another qualification is that 25 percent of their directors must be Canadian residents. Companies meeting the full 25 percent test, in addition to a more lenient tax, are also allow- ed faster writeoffs in deprecia- which have 25. tion of machinery and equipment. While many persons may not regard this as being a ‘*‘radical attack’’ on foreign ownership, it is worth noting that the tax has been far from welcomed by for- eign investors. It has infact been regarded by many of them asa **dangerous experiment in eco- nomic nationalism.’’ * * * Concerning steps taken against foreign investment by other countries, one of the most inter- esting examples is supplied by Mexico. Its actions were describ- ed recently by correspondent C. Knowlton Nash in the Financial Post, **If Canada were to use the Mexican answer to economic do- mination by the U.S. it would mean sacrifices and policy chan- ges far beyond what has been suggested in Canada by former Bank of Canada governor James BUENOS AIRES — (AP) —Argentina ignored & US. warning of possible serious gonsequences 37 d@ last night annulled its multi- million-dollar oil contracts with eight United States and four other foreign ast week was a ‘‘time of crisis’’ for the U.S.-spon- sored Alliance for Progress in Latin America. : At the second annual review meeting of the alliance in Sao Paulo, Brazilian President Joao Goulart challenged the validity of the alliance as a remedy for Latin America’s economic problems — dogged by an imbalance of more im- ports than exports, He urged a united front of Latin American nations inde- fence of common interests and an independent trade line, pos- sibly in cooperation with Asian and African countries, His re- marks were saidto have ‘‘fall- en on willing ears.’’ Meantime, Argentina an- nulled multi-million dollar oil contracts with the U.S. and other foreign companies, Ar- gentine President Arturo Ilia said the contracts, signed un- U.S. ‘Alliance’ is in trouble der former President Fron- dizi, represented a violation of his country’s sovereignty. Foreign oil companies will only be permitted to perform specific works and services for Argentina’s state agency under its supervision. As if inspired by the Argen- tine example, press reports indicate that ‘rising nation-— alist pressures’’ are being brought to bear on Fernando Belaunde Terry, president of Peru, to expropriate the hold- ings of the U.S.-owned In- ternational Petroleum Comp- any Ltd, The Parliament of Peruhas worked out acontract whereby the company either agrees to pay a tax of 102 percent of its profits, or faces exprop- riation, according toa story carried by the New York Times. Coyne or Finance Minister Gor- don in his original budget pres- entation,’’ wrote Nash. ‘Primarily, it would take an enormous amount of courage for any Canadian government to try to recapture Canada’s economy from the U.S. as the Mexicans have recaptured it from their economy.’’ Foreign ownership in Mexico once dominated mining, electri- cal power, transportation and parts of agriculture. ‘‘Today it had been squeezed back to a mi- nority position in mining and has been almost extinguished in other areas,’’ Nash reported, ‘Only in manufacturing is there significant foreign owner-' ship. Even here it has been squeezed back repeatedly in re- cent years. U.S. controlled com- panies in Mexico probably ac- count for one-sixth of the total Mexican manufacturing produc- tion.’’ ok * * In some cases the Mexican government has outrightly pur- chased heavily foreign invested private enterprise, including electrical power companies, movie-theatre chains and steel firms. The Mexicans have placed out- right bans on imports or have raised tariffs so high on many items that it has become un- economic to import. Foreigners may not own land on the frontiers or coastline, nor are they allowed to engagein the petroleum industry, basic petro - chemicals, radioactive substances, electricity, railway transportation, and telegraph ‘communications, Foreign holders are restricted to 49 percent in airlines, mineral waters, extracts and syrups, shipping, rubber products, min- ning, fertilizers, fishing, radio and television. Discriminatory taxation has been levelled against foreign- owned firms and foreigners are often forced to go through an almost impenetrable forest of bureaucratic licensing, which ef- fectively discourages many of them. All this has caused Mexico to lose U.S. foreign investments and there is little new direct U.S. investment in that country © today. * * * The ‘‘red-tape’’ method of holding down foreign investment, incidentally, is also used in Jap- an, according to a survey by Busi- ness International. © Before government approval of foreign investment is given, authorities. determine whether the product or process is new to the country, whether it fits into the overall plan for industrial expansion, and whether the pro- posed new industry will com- pete too strongly with entrench- ed local manufacturers. Government screening in Japan can be avoided and 100 percent equity captured by for- eign investment by establishing a so-called yen company — one that does not have the right to remit dividends or repatriate capital. The final note worth register- ing is, perhaps, that in both Mexico and Japan, according to Business International, there has been a Significant relaxation in the past two years on restraints on foreign investment. hundreds now imprisoned. World events in pictures ee Photo shows a recent rally of Soviet workers held to protest re- pression in Latin America. The raised photo shows Jesus Faria, general secretary of the Venezuelan Communist Par!y, one of Students at the University of Montevideo in Uruguay have been carrying on a fight to save their schoo! from closure. The gov- ernment says it can’t afford to keep it open Pho!o shows police moving in on students staging a sit down. “Japan's socialist leader Jotaro Kawakami is shown speaking at an election rally in Tokyo. The election was held this week. The socialists called for strict neutrality in foreign policy. ss will be maintained. FRANCE J BARCELONA @ ZARAGOIA @ i PORTO! y O J Madrid